We’ve also learned this lesson the hard way. These are now the clauses we require in every project we do:

- Payment is due X days after receipt of invoice, or immediately after the consultant has addressed any quality issues, whichever is sooner

- Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order.

- In the event of a late payment the invoice for the next deliverable shall immediately fall due.

- The consultant shall be entitled to shift deadlines on deliverables in the event of a late payment as a result of any work disruption, without incurring any liability.

- Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply.

- The client is responsible for any bank fees incurred by their, or any intermediary bank. In the event of a SWIFT transaction it shall be made with the OUR payment code.

- The jurisdiction in the event of a conflict shall be England and Wales. Neither party shall be bound by arbitration.

- The client and consultant shall both indemnify the other up to the total value of the contract and shall not under any circumstance be liable beyond X GBP.

We also no longer share downloadable links of our deliverables until they are paid up. They get a view/comment only link for reports/data etc.

We’ve found that clients that aren’t willing to accept these terms won’t pay you either way.

We determine the net days on the invoice based on the credit rating of the client. Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”. About 1% of contracts tend to fully or partially default on their payments.

We’re in a particularly credit poor industry but our average delay due to late payment is 23 days. Those clients where we stop delivery pay on average 11 days sooner than those contracts where we don’t stop delivery.

This is based on around 2,000 invoices sent over the last 5 years.

Author - I don't think you learned the correct lessons here.

The most important thing is that you weren't "ripped off" - you were taken advantage of. Ripped off is when you buy a TV that's supposed to work and it doesn't. Or you just don't get one.

You were taken advantage of - which requires your active consent. Nobody made you do all these things for them on faith. You could have left after a few days. You could have demanded payment up front. But you volunteered to continue down this awful path.

I hope you learn to value your time, and yourself, higher than this in the future.

One thing I learned from consulting is if you position yourself as the "fix your mess" guy you have to be very defensive. Ask for more up-front, and bail at the first sign of underpayment.

Be pleasantly surprised when a poorly run project is being run by nice, honest people. Prep for the opposite.

Worked in the SF tech scene since 2010, and so many founders who I found through YC/HN and AngelList failed to pay me over the years.

Often paid late, but FIVE times, I never got paid at all, one time it was several thousands over the course of months and I almost pursued it in court, but in the end I took the L.

It's always these incubator types, they're the absolute worst clients. They have the cash in the bank too, they often just forget or feel entitled and don't want to back down.

NEVER work for a YC founder.

> A contract is toilet paper

It isn't, but you can't get blood from a stone and squeezing costs money.

It sounds like the entity that the contract is with has no real assets and/or is based in a jurisdiction which is hard to enforce judgements in. That's a case where you need to get paid up-front, which is the real lesson in this article.

Good lessons in here, but the part about giving up on legal action because they told him they’d dissolve the entity is questionable. This is where it pays to have a good relationship with a lawyer who will be up front about your chances and the cost of legal action. The sum discussed falls into the difficult range where it could take enough hours to try to collect that you’d be worse off than where you started if the lawyer can’t deliver anything.

However them dissolving the entity and moving their assets and IP around is also not free and will incur overhead, if they actually did it.

Threatening to dissolve the entity seemingly admits that they do have something worth collecting against. In my experience the companies who run out of money just tell you that they’re out of money and they also start losing key employees and your email contacts because they’re not getting paid either. If the company continues to exist and they’re threatening you to not sue, that might be a sign that they do have the money but they’re relying on intimidating contractors to not try collecting it.

Legal action is not free, so all of this has to be weighed.

EDIT: I should explain how I know this. Younger me took a job with a startup that got in over its head with spending but the CEO didn’t want the party to stop. His strategy was to stop paying any vendors and use the remaining cash flow to only pay past invoices for vendors that we needed something from (more work, more product) or anyone who looked like they were going to sue us. If someone got lawyers involved, they got paid. Needless to say I didn’t keep that job very long.

I have a friend who retired but still does some contract work. They were on salary their whole career and are not used to sending invoices and tracking down payments. One of their clients was late paying and my friend wasn't concerned, but I encouraged them to be diligent about insisting on being paid on time. I have been a freelancer for over a decade and in my experience, the further away you get from a bill, the less real it becomes to the person who owes it. They start forgetting what the project was, or worse, start questioning why they even have to pay for it. You have to stay on top of these things or they can spiral out of control.

I've started operating in really granular units of work. Like less than $1000 per. Cash on delivery. This won't work with all clients and all jobs, but there are places where it does work very well. Advantages include being able to avoid paper contracts altogether. Verbal agreements and a 4 column xlsx that is reviewed monthly are all that seem to be required with some of my clients.

If I don't get paid for one day of work, I will probably get over it in a few hours. If I don't get paid for six months of work, we will have a serious problem. The tighter and more incremental we can make the delivery process, the less likely anyone gets screwed.

If a party is pushing hard for long-term contracts or large up-front sums of payment, I would walk away from that transaction unless there was a literal golden goose sitting in their lap.

> I missed the month of May with my 2-year-old kid. My wife cared for a 2-year-old alone.

The weirdest part to me, receive a call and just get up and go? Priorities? Did you write this blog post from the doghouse?

Never do anything on faith or as a handshake deal. Always ensure you get paid (hint: escrow is kryptonite for weasels). Trust everyone, just not the devil inside them.

Also, mandatory: https://creativemornings.com/talks/mike-monteiro--2/1

> A contract is toilet paper

A contract is an entrance ticket to a court case. If you can't afford to fight the court case, the contract isn't much use. If the other party aren't in a jurisdiction that the court can enforce in, the contract isn't much use. If the other party can just vanish and when you try to take them to court, the contract isn't much use.

A contract doesn't stop other people from doing things (or make them do things that they would otherwise not do). It just specifies that if they do those things (or don't do them) then you can take them to court. You still need to be able to take them to court for any of this to work.

Contracts aren't toilet paper. But they also aren't the magic solution to all problems that they are sometimes held up to be.

Actually sort of darkly clever– they turned OP into an unwitting investor.

Project goes well, he gets paid and they're best buds, and he doesn't even realize he was scammed (by intent). If not, well there's no point suing a failed company.

Sometimes you just have to get scammed to be able to recognize scams. Seems obvious to outsiders, but can be hard to see when you're in it.

Some favorites:

- No way they would actually screw me over! We're buds/they got me tiger balm/they paid some/I did them a solid

- Thin veneer of safe fallbacks that doesn't hold up under scrutiny. Legal or other 'repercussions'

- Endless delays and excuses (though it's usually too late by this point)

What's an "AR bus"? How can augmented reality windows work on a bus unless you are (a) tracking the passenger's head and (b) there's only one passenger?

When I was unemployed, looking for a job, living off severance, someone from my previous job contacted me to do some consulting work "for a friend". Initial terms were for some kind of stock in the company.

It seemed shady from the start, but since it involved python, something I had very little experience with, I decided to try it. I worked like 15-20 hours per week for a few months, learned enough python to be comfortable with it and some other APIs as well (being a little vague on purpose). Later said they could maybe afford to pay me some $$ due to another company they had founded being sold (I verified this much, the person had founded and sold a few companies).

It eventually fell apart after my first deliverable (as I expected, mostly). I used encryption to send python files that would only work for a couple of weeks. Not sure if they ever did anything with it (it's been a few years). Oh well, it ended up helping me get another job where python was a good skill to have.

The biggest loss was that of losing all trust in the person setting things up.

When you walk into a shitshow like this, the first thing you do is secure your payments. Anyone who is in such bad shape like how OP described it means that they are desperate, and desperate people will do and say anything to get help.

It is most likely going to not pay anyone so you need to make sure you're paid above and beyond anything else otherwise walk.

Evergreen advice from the design side: https://www.youtube.com/watch?v=jVkLVRt6c1U (Mike Monteiro: F*ck You, Pay Me)

Be paid or don't work.

I am so deadly serious - do not continue working if your invoices are late.

You don't have to be a jerk about it, just explain to your primary contact that you need to be paid and you pick up tools again when the money has arrived.

BUT it is on YOU to properly negotiate reasonable payment terms. And if you don;t know or don't trust the client then require payment in advance until a stronger commercial relationship can be settled in. Do not be a baby - go research business contracts and payment terms.

Do not be afraid to lose business from companies that are squeamish about paying you - in fact actively avoid such companies.

Your blog is a treasure trove - thanks for sharing.

Do you still cut your own hair ;) ?

But yes us folks in the creative world can learn a few things from the corporate world when it comes to contracts and payment schedules. Mike Monteiro's talk 'F*ck you, pay me' comes to mind.

---

https://www.mikemonteiro.com/

https://creativemornings.com/talks/mike-monteiro--2/1

The fact that this is so many words makes me worry the author underappreciated the main lesson: risk exposure.

When you go out of pocket - you are out of pocket and the risk is all yours. If that one thing was different then all the remaining risk is on the client - they don't want to do version contr - ok cool you still get paid.

Usually when you have to pay in to get paid out (outside of a direct investment scenario) it's a scam. The people who fall for the Nigeria Prince thing are operating the same way.

That doesn’t really sound like “being ripped off,” as opposed to “betting on a lame horse.”

The people behind this were irresponsible, childish, and exemplars of the Dunning-Kruger effect. They weren’t really hardline crooks. Crooks are probably a lot more organized.

I have gotten myself invested with similar crowds. There’s usually a charismatic spokesperson, leading the chaos.

They likely didn’t plan to rip him off, but paying him wasn’t really something they thought about. Real crooks put lots of planning into taking money.

> Multiple very junior developers were touching (binary, TouchDesigner) code and deploying straight to production via thumb drive, with zero version control. In fact, they didn’t know what version control was.

I suspect many startups fit that description. If they survive, then they usually pull themselves up by the bootstraps, eventually. Many of them collapse, taking everything with them.

The same founders who require employees to work 24/7/365 while they jack off to Hentai all day are the same ones who don't pay:

HockeyStack, Greptile, Velt all had problems paying me and all required 7 day a week, overnight, etc.

Man that was an awful read (but well written). As someone who is starting to slowly work on my own consulting activities, I feel I am up against a world of "ripping-off". Thanks for sharing.

> End clients can’t tell the difference between these bozos and me. I don’t know what to do with that information but it feels bad.

this is only getting worse with ai.

all the artifacts of good work are there but none of the depth.

> The faith was that if they could’t pay, they’d let me know because I was actively digging their asses out of a hole they’d dug, and doing so tirelessly and professionally, without complaint.

I get what the author is saying here. But it's a bad idea to treat one's work team with deep communal devotion in this way, as if they are a kind of dysfunctional family-- or, in the author's case, apparently higher in status than real family.

Doing this without proper remuneration creates a market distortion, and that is bad for capitalism.

Contract terms can vary greatly depending on the situation and the company you’re working with.

Early/frequent payment terms are always good to have but you may not always have the leverage for it depending on where you’re at as a contractor.

Takes getting ripped off a times before insisting on better terms I guess. It’s like bombing your first job interview… you can prepare but it just needs to happen.

There's not any incentives to pay you when they're in China and there's no legal recourse from the US. Even in the US suing is often times not worth it economically and getting someone to pay after a win is painful too if they don't just file bankruptcy. Escrow or upfront only is the best way to go.

In such a situation (startup with unclear financial situation, foreign country) I would demand weekly payments. And if it is more than a week late, I would just leave.

Very very important to get something up front; sometimes half up front doesn't always work for long projects, but you can scope out tranches where if you dont get paid for the first section of work, you walk away.

Has saved me from wasting my time on loads of projects before.

Reading the thread, I think most of us who have worked contracts here have been burned one way or another

No longer a contractor but I used to offer a 10-15% discount for paying upfront. Almost every client took this deal. Earned a little less but never lost sleep over payments.

This reads less like a "got ripped off" story and more like a perfect storm of every classic consulting red flag showing up at once

Hmm, definitely an unpleasant lesson in lead qualification. Lots of clients aren't worth it. Good learnings to trust your gut. Especially with places that are in bad shape income-wise.

> They were carpetbaggers and dilettantes convinced by their own inexperience and the advice of a onetime VJ that they could pull off something I’d twice helped quote to be brought home by a cadre of hardened killers with shitloads of math and know-how at eye-watering prices. They were way way way over their heads and were in no way interested in updating their priors in light of the shit they were swimming in.

And yet, somehow, you gave them the most important time you had for their promises.

I don't know what it is about me, but I have a sixth sense for losers who will not pay. There's been a number of times where acquaintences have taken contracts I've turned down (against my advice too) and have not been paid. There's something about slick communicators that just activates my spidey sense.

And TBH, I have also had a few false positives. One contract I did not take (it was for a mix of equity and cash) turned into a 10B+ company, and I would have made enough to retire (again) on it over a 1-year contract. I didn't because the founder who called me just sounded completely clueless and was barraging me with marketing speak instead of explaining what he needed. I was so exhausted from his BS I just decided I didn't need the headache. (This is also a danger of having enough to retire ... you turn down a lot of potentially lucrative work because you just don't think the headaches are worth it).

In the grand scheme of things, other than that one big missed opportunity, I haven't missed too much upside by being so picky. And when I'm counseling colleagues about their unpaid contracts and conflicts, I'm always silently thanking the stars I have the luxury to say no. I know that's a priviledge.

Sadly every consultant can tell you at least one (hopefully only one) story about clients who refuse to pay. Either outright, or with some excuse about you "not delivering", or they "not liking" what you delivered. I have one of those stories as well.

My SO has her own story - she ran into a guy whom she later found out does it as a policy: hires people, never pays, threatens to sue them if they publish their story. Her lawyer told her to just forget about it.

It's then that find out the limitations of our legal system: if the client is international, forget about it. If they're out of state, prepare to deal with an expensive legal process taking place where the laws may not always favor you. And even if it's local, and you won in a small claims court - good luck collecting.

I have periodic payments built into all my contracts, with the final payment taking place after acceptance tests, but before me surrendering all materials and code. I won't say this is a 100% bulletproof solution, but the alternatives suck.

I was owed billable hours from Stanford University but refused to do any further work until the outstanding invoice was paid. Their accounts payable department didn't want to, so I had to tell the client "sorry" and walked away. It's really weird because I didn't have a problem in the near past then and was even an FTE at one point. I'm unwilling to work for free or for imaginary, low liquidation preference equity of a worthless startup.

Ordinarily, I would sign master agreements and set PO terms up-front. Typically, the better customers would agree to very strict requirements / objectives for a particular time period for a specific price. Any deviations would require negotiation. Hourly is fine too but there must be regular milestone deliveries so that there's demonstrable value for money being conveyed rather than an appearance of a milking-oriented consultant. Expectations must always be managed.

One thing I've learned from working in different fields, which seems to hold true for all business: If a client approaches you with a dumpster fire of a repair job, are too broke to get a real fix, and get agitated (or simply ignore) by the talk of what the job will cost - simply tell them "sorry, I can't help you with this one".

99 out 100 times they will be a hassle, and you'll be lucky if they pay you anything beyond the upfront payment.

Even worse if it is another business, as the author writes, those can just declare bankruptcy and walk away.

There's no such thing as a company temporarily being in dire straits. These kind of companies are always in dire straits and crisis - it's a business tactic to not deliver and not pay. Just stay away, whether you're a customer, a contractor, an employee or if they want to be your customer.

He says "trust your gut" about 12 times, but the whole lead up has 0 mention that he was worried he would not get paid. His only gut feelings seemed to be around tech issues.

It's a scam economy.

“A contract is toilet paper”

A little hyperbolic, but more accurate than not when laypeople think about contracts.

A contract isn’t a magic spell, it is a declaration of shared understanding that can be used for clarity and in legal proceedings.

If you think of a contract as a way to ensure you get what you agreed, yes, it is toilet paper, because a contract doesn’t remove counterparty risk.

I once worked for a founder who gave me a “raise” from a W2 to a 1099 contractor. Except the raise was just not deducting any of the taxes from my pay. I was 24 and was naive.

I sued him, and won reclassification as well as two payments he never paid me, but both the state and IRS could care less that I’d been taken advantage of. They happily added their fees, interest and penalties for something I was the victim of. Years later, the debt resurfaced in the form of aggressive levies directly to my bank account after no contact for over 10 years and no collection activity. By then, the fees and interest were 3x what was “owed” to them. They actually told me it’s standard practice to wait until the debt grows and then collect on it. After so many years I didn’t even have the records from the lawsuit.

I learned that the government doesn’t care about you, especially if you’ve been scammed you have to be extra careful because that’s a signal to them you’re someone they can get even more money from. The process of disputing it will waste more of your time and mental health than it’s worth in all but the most extreme cases, and that is 100% by design.

> A contract is toilet paper

no it isn't. why you did not sue them? success rate of international arbitrage (New York Convention) proces into China is 90% success rate. USA/EU companies who sue Chineses companies in China for breach of contract seem to be winning rates. Enforcement of USA curt orders do not need to go thorugh Chinese courts again, and are enforced by local authorities (local sharks) with success rate of 80% for foreign firms suing chinese firms. fees are also fairly low. case is straightfoward.

if author went and sue, likely he would get his money back.

> End clients can’t tell the difference between these bozos and me. I don’t know what to do with that information but it feels bad.

This is unfortunately all too common. It's hard for someone who isn't an expert in the specific field to separate a smooth grifter from a more typical sales pitch

All this for a $35K contract, that sucks.

Who are they?

Not really to the point of the post, but how can you deal with parallax error when your users are sitting on bus seats and your display is built into the bus window anyway?

Wage theft is the most lucrative and least prosecuted crime in America.

The page is actively hostile to me using reader mode on my phone. It keeps resetting my scroll progress to the top of the article. This is the second time I’ve run into this (first was within the last two weeks).

I hope this is a bug in my phone’s handling of something and not intentional. Until I know otherwise, I’m treating sites where this happens as deliberately hostile for the same reason as always: ads. I use reader mode to escape ads that my ad blockers miss but also to avoid poor design or hard to read fonts and the like. My response is the same as ever: I closed the article.

You went to China and worked for free. What you whining about? Are you surprised they did not pay you? You even had a sore wrist. What a hero! No sympathy whatsoever.

Who are they?

OP wasn't ripped off, OP just forgot to define their contract. Like, entirely.

Nobody forced OP to work 11-14 hour days. Contracting 101 stipulates that you define your hours ahead of time. You come in, you provide your expertise, and you leave at the end of the day. Let the client's junior employees work long hours. Not your problem.

OP brought their own equipment, which is totally fine but "who provides equipment" is also in the contract from the start. OP should have made a list of equipment that the client will require to complete such a project and stipulate a client budget be set aside to cover any shortcomings as they arise.

The contract is where you define when you get paid. "Deposit is XYZ quantity, non-refundable. Contractor will be paid for the upcoming week in advance by X date. Failure to remit payment will halt work."

I understand that the point of this blog piece is that it was a learning experience for OP but this stuff is pretty obvious isn't it? This is pretty much what comes up when you google stuff like "how to get into freelance contracting." I'm shocked and feel bad for OP for letting things get this far. Sadly, they were not ripped off by anyone but themselves.

Back in my younger days I found a bunch of liberals who were claiming to run a software company. They were really into the social justice BS.

After about a month of employment, I was told I was being rude to ask for payment. Apparently they neglected to tell me that they actually only pay their employees 60 to 70 days after they start.

Of course the first red flag was them doing the 1099 dance for slightly above minimum wage. I had been forced to do that before, but guess what. They paid us every single week.

Quiting without notice was one of the greatest feelings with these clowns. By this time they had started to ask me to literally work for free. "Unpaid training". They stopped scheduling me for paid hours anyway, so no notice needed.

Right after that I worked for some conservatives. They paid me early. My first year I got a large raise.

There were some awkward moments like the CEO telling me who to vote for. But for the most part it was awesome.

I still consider myself to be very liberal, but I don't want to work anywhere that does a lot of virtue signaling. Your beliefs don't make you a good person, your actions do.